European Commission warn on in-app purchases in children’s games

The Snowman and The Snowdog game uses in-app purchases, but up to a £20 limit. Photograph: PR

Consumers and children need ‘better protection’ from costly spending in ‘free’ games which include in-app purchases, warn commissioners as they start investigation.

The European Commission is to hold talks with Apple, Google, and app writers, saying consumers need better protection against “unexpected costs” from in-app purchases on tablets and smartphones which can rack up bills of thousands of pounds.

The EC’s justice minister Viviane Reding and consumer policy commissioner Neven Mimica will lead meetings in which they will look at whether it is misleading to classify games as “free” if in-app purchases are needed to make progress.

“Consumers and in particular children need better protection against unexpected costs from in-app purchases,” Mimica said.

“Misleading consumers is clearly the wrong business model and also goes against the spirit of EU rules on consumer protection,” said Reding. “The European Commission will expect very concrete answers from the app industry to the concerns raised by citizens and national consumer organisations.”

In the UK, the Office of Fair Trading investigated in-app purchases (IAPs) in childrens’ games in 2013, reportingin September after five months with guidelines for app developers which some felt offered little change.

The games app business is booming, with the whole app business expected to be worth around €63bn within the next five years, the commission said. More than half of online games in the EU are advertised as “free”, but can carry hidden costs.

But games developers are also reacting to buyers’ increasing reluctance to pay upfront for games. That has driven down advertised prices while also encouraging the use of pricey IAPs in games designed and played by children and teenagers where spending is charged against an adult’s credit card linked to an account.

The results can be dramatic. Apple was sued in the US by a group of parents who complained that their children had run up huge bills through such “IAPs”.

It settled with a payout of around $600m. In the UK, two parents managed to get a refund after their son spent £980 buying virtual donuts in a Simpson’s game, while in 2011 another eight-year-old girl ran up a bill of £4,000 from games such as My Horse and Smurfs’ Village. Apple refunded her father.

But Ilkka Paananen, the chief executive of the Finnish game giant Supercell, the hugely profitable maker of hits such as Clash of Clans, said on Twitter: “We welcome this discussions, it is very important for the future of our industry. Important to set standards.”

For many games companies, the use of IAPs has become essential. According to the app testing company Swrve, data from January showed that only 1.5% of players of mobile games spent any money at all – and that half of the total spending came from 0.15% of the total players, or one in ten of those who do pay in games.

The EC’s move comes after concerns were raised by consumer groups in Denmark, Britain, Italy and Belgium about the prevalence and cost of IAPs. Though they can be disabled on any device, they are on by default.

Among the proposals to be discussed are clearer explanations in games about the costs involved, removing inducements to make purchases such as “Buy now!” and “Upgrade now!” and preventing payments being debited without explicit consent.